OP-ED: Rationing is built into the Canadian health care system

"Long waits and service shortages are not accidents. They are the predictable result of a single-payer system that limits access."

Source: Adobe Stock

Author: Lee Harding

Long wait lists, emergency room closures, and a growing shortage of doctors are now routine across Canada. Opposition parties, including in my own province, use health care as a political weapon, blaming staffing shortages on underfunding. Meanwhile, premiers and provincial health ministers blame Ottawa to excuse the rationing of services.

They’re wrong. The problem is structural. Canada’s single-payer health-care system suppresses market forces and treats rationing as policy. No amount of money will fix that.

For hospital and physician care, Canada operates under a single-payer model in which the provincial government is the sole payer. Control over funding means control over incentives. As a result, health care is shaped primarily by political considerations, with patient access and outcomes taking a back seat.

That control is reinforced by federal health transfers. As a condition of receiving funding, provinces must comply with requirements under the Canada Health Act, including prohibitions on extra billing and user charges for insured services, enforced through financial penalties. These rules restrict alternatives while allowing provinces to shift blame.

When access deteriorates, provinces point to Ottawa. When reform is demanded, they cite federal conditions. This deflection works politically, but it is largely an illusion. The same taxpayer funds both levels of government. It makes little difference which pocket the money comes from when the result is the same.

The Canada Health Act should be renamed the Guaranteed Communism Act because it forbids doctors and hospitals from charging patients at the time care is delivered. That prohibition distorts the market in predictable ways, the most damaging of which is moral hazard. When something is free at the point of use, it is overused.

When a senior visits a doctor regularly for social reasons, that is moral hazard. When patients choose emergency rooms over clinics for convenience, that is moral hazard. The cost is invisible to the patient and fully borne by the taxpayer. Remove even a small portion of that insulation and behaviour would change.

In a functioning market, unmet health-care needs would attract new providers, clinics, and services. But when governments pay, health care is treated as a cost to be contained, not a service to be expanded. Most provinces fund hospitals through global budgets. Every treatment becomes an expense that must be rationed.

Under that system, efficiency is punished. Spend too much helping patients and management risks removal or contract termination. Work too efficiently and next year’s budget is cut. The rational response is to spend everything, regardless of whether it improves care. Predictably, bureaucracy grows while frontline capacity shrinks.

The dominance of unionized public sector workers in health care delivery completes the cycle. Unions push for higher wages and benefits, which governments either grant or legislate away at political risk. Higher compensation means fewer staff can be hired. Shortages persist by design.

Physicians across multiple specialties operate in the same constrained environment. Through collective fee negotiations, prices are fixed in ways that would be illegal in most other sectors. In health care, it is accepted as normal.

These are the ironies of a system falsely called free health care. Everyone pays, no one controls costs, and patients surrender both choice and access. You can make healthy choices for yourself, but you will still be taxed to pay for someone else’s care, regardless of their choices.

Now consider food, which has more impact on health than hospitals ever will. Food provided through markets without moral panic. No one proposes a government-run food system, and that’s no wonder. The result would be long lineups and limited supply in the stores, as seen in the Soviet era. Yet, that’s exactly what we see in Canadian health care today and for the same reasons.

Many European countries combine universal coverage with mixed public and private delivery and achieve better access. Canada could learn from them. Instead, it returns endlessly to the same answer: spend more.

Until the structure changes, that answer will keep failing. There will never be enough money, just more people dying on wait lists while a decreasing few insist on keeping the same failed system.

Lee Harding is a research fellow with the Frontier Centre for Public Policy.